Good questions. My non-professional opinions... insurance is a gamble. The chances of you having an accident, or having a tree fall through your living room or worse - hitting someone and injuring/killing them are hopefully small. But you still need to carry insurance due to the fact that it COULD happen. I hate paying out more money for the extremely unlikely event of those possibilities, but it's weighing what your personal risk level is, what you actually have to protect and what you can afford to do. So you should start with taking a hard look at what sort of risk factors you actually have, and how comfortable you are getting bare minimums vs. the peace of mind that comes from having higher coverage.
Is more better?
Not always. In your case, I'd say get the minimum in coverages, but keep in mind that YOUR minimum is what you'd need to be able to replace your car/house in the event of losing everything. If you're in debt, then carrying a super high deductible probably isn't a good idea as in the hopefully unlikely event that you totaled your car, you'd probably have difficulties coming up with the deductible if it was thousands. You also probably should consider bumping up your liability coverage when you can, and as your assets grow. I've just recently realized I needed to do this.
Is an umbrella policy a good idea?
Probably, but maybe not until you have a large amount of assets to protect. I've seen several posters discussing umbrellas, and it does make sense if you're talking upwards of 500K to millions, since you don't want to be wiped out in the event that someone wins a settlement against you for millions... but regular insurance policies on home and car should be sufficient for most folks.
What coverage is the right amount for me right now as I'm digging out of debt and have little in the way of assets.
Car wise, I would suggest set your deductibles as high as you can reasonable afford without putting yourself in a difficult position. Look up the blue book value of your car and if it's under $5K I would suggest dropping collision and take a HARD look at dropping comprehensive if you have both of those. If you have health insurance already, don't do the personal injury protection.
House insurance - you don't want to skimp too much on that, but take a good look at the deductibles. Keep in mind as soon as you do dig out of the debt and start getting your emergency fund that can handle the higher deductibles, you can go adjust your car/home deductibles at any time.
I think one of the biggest things to remember is to check around and get several quotes and bundle your car and homeowner's insurance for the discounts.